John Lewis Partnership, London, plans to freeze the defined benefit portion of its hybrid pension plan effective April 2020 to cut costs, a spokeswoman said.
John Lewis Partnership said Wednesday, 58 representatives voted for changes to the company's hybrid structure, which combines elements of defined benefit and defined contribution plans. The move will save £80 million ($104 million) in annual pension costs for the sponsor, which operates several retail and consumer businesses, the company said in a news release.
The hybrid plan had £4.4 billion in assets as March 31, 2016, the latest valuation date. The funding deficit was £479 million, down from £840 million reported in a 2013 valuation.
The 83,900 participants will be moved to an improved portion of the defined contribution segment; the DC plan will be the only retirement vehicle offered after April 2020. The improved plan will offer matching contributions of up to 8% of salary and an additional 4% after three years of service. Currently, the contribution rate is 4.5% and is matched by the sponsor.
